Category: Business

Metaverse

When you woke up in the morning on 29th Oct 2021, you must be surprised to notice that Facebook has changed its logo into an infinite loop ∞, and its name to meta, thus announcing its official entry into the Metaverse. Instantly the stock markets reacted with a bang as metaverse related stocks Roblox, Nvidia and Unity spiked significantly. Compared to the stock market, the crypto market reacted even more dramatically. The blockchain metaverse pioneer Decentraland governance coin MANA rose from $1 to about $4, i.e., 400% gain within four days. Another metaverse coin SAND (The governance coin of the SandBox) from $0.9 to 2.6, about 290% gain in the same period. In addition, GALA and MBOX also spiked significantly.

In recent months, the term metaverse has sort of become the newest buzzword in the crypto and gaming space, and startups venturing into Metaverse are mushrooming around the Globe. These startups were able to attract investments from angel investors and VCs. The biggest news this year was the direct listing of Roblox on the New York Stock Exchange which the company’s stock closed at $69.50 per share, giving the company a market cap of $38.26 billion. Another sensational story was Epic Games, the company that built Unreal Engine and the popular metaverse game Fortnite has just completed a 1 billion round of funding to support the long-term vision for the metaverse. 

However, the most mind blogging news was the announcement by Mark Zuckerber that he wants to transform Facebook into a metaverse social media platform , even changing its name. In fact, when you woke up on 29th Oct 2021 , you will notice that Facebook has changed its logo into an infinite loop, signaling its entry into the Metavese. With Facebook going insanely big on Metaverse, and everyone so closely tied to Facebook, what will be the impacts on our personal life socially , economically and perhaps psychologically? We will no longer interacting in a 2D world but a VR, AR and XR mixed reality parallel world where you can meet your friends face to face, representing by your Avatars. However, things can turn ugly if you are not careful, friends you hate may suddenly appear and say hello to you, and he may just stab you from the back, though only your Avatar…

Metaverse is a term that first appeared in science fiction. The prefix “meta” means beyond, and “verse” means universe. The term was coined in Neal Stephenson’s 1992 science fiction novel Snow Crash, where humans, as avatars, interact with each other and software agents, in a 3D virtual space that uses the metaphor of the real world(Wikipedia). Fast forward to 2011, Novelist Ernest Cline authored a famous science fiction, Ready Player One, which hits theaters in March courtesy of Steven Spielberg. While the story is set in the strife-torn meatspace of 2045, most of its action unfolds in a vast network of artificial worlds called the OASIS, an earlier version of metaverse.

The recent popular Netflix short series “The Billion Dollar Code” that was based on the true story also tell us that the early concept of Metaverse has indeed started to materialized in the 1990’s. Although the Virtual Reality technology was called Terravision invented by a group of artists and computer nerds in Germany, it is indeed the 3D virtual map that allows you fly and zoom in to any part of the world in real time. It was alleged that Google stole the technology to create Google Earth though the case Art+Com vs Google of patent infringement was rejected by a US court.

Metaverse would not have been possible without the invention of the Internet, in particular the World Wide Web that allows global citizens to access and share multimedia contents around the globe. On the 6th of August 1991, Tim Berners-Lee posted the very first public invitation for collaboration on the World Wide Web, the beginning of the connected world where people are connected and access information and enjoy multimedia entertainment, even monetize from it. It was also the era of the browser war involving Netscape, Mozilla Firefox, Microsoft Internet Explorer, Safari and more. Without a browser you could not access the web. Eventually IE won the war but lost to Chrome in the 21st century.

The early world wide web was just providing multimedia content, non-interactive and did not allow any tom dick and harry to create a website, you must be a little bit tech savvy to use the HTML code to create a webpage. This era is generally known as Web 1.0. Besides, the computer processors were much less powerful than even today’s mobile phone , coupled with slow Internet speed using the dial-up modem, accessing the web was a painful experience. It is no wonder Terravision encountered a lot of issues due to the limitation of the hardware and Internet bandwidth. Despite the limitations, many dotcom companies were formed trying to monetize from the web, even some early online business platforms were developed to facilitate online commerce, which later known as e-commerce. Some famous examples were eBay and Amazon.com. Internet Giants Google , Facebook and Alibaba were not even born yet.

Entered the 21st century, many dotcom companies and startups went bust as a result of the dotcom bubble happened at the end of the 20th century, leaving a few giants like Amazon.com and the struggling Yahoo! to carry the torch. However, the Internet infrastructure has become more robust with the invention of faster modem, router and other hardware and much more powerful computers and laptops. In addition, connecting to the Internet has become seamless as WiFi replaced the old dial up modem. Besides that, touch screen mobile phones were becoming ubiquitous , making mobile web possible. Now people can stay online 24/7. It is also the emergence of search engine giant Google followed by the social media giant Facebook. Users are not only able to access the information, they can create and publish contents easily via social media and interact with other users. The interactive web is hence known as web 2.0.

Early 21st century also saw the emergence of  massively multiplayer online role-playing game (MMORPG) . It is a video game that combines aspects of a role-playing video game and a massively multiplayer online game. This type of game allows players to immerse themselves in a virtual world so it can be considered a precursor of Metaverse game. MMORPGs are stark different from single-player or small multi-player online RPGs by the number of players able to interact together, and by the game’s persistent virtual world which continues to exist and evolve even while the player is offline and exit the game.

Since many massively multiplayer online games share features with the Metaverse but provide access only to non-persistent instances that are shared by up to several dozen players, the concept of multiverse virtual games has been used to distinguish them from the Metaverse.

In the NFT space, it refers to shared virtual worlds where land, buildings, avatars and even names can be bought and sold using cryptocurrency. In these environments, people can wander around, play games, visit buildings, buy goods and services, and attend events, exactly like the real world. Let us examine some popular Metaverse NFT platforms. Metaverse has gained increasing popularity due to combination of NFT, DeFi and GameFi that form the in backbone of the Metaverse ecosystem.

To learn more about metaverse, please come back in my blog to check on updates on my current book publication date, the title is “Metaverse Made Easy: A Beginner’s Guide to the Metaverse: Everything you need to know about Metaverse, NFT and GameFi “

References

What is NFT?

If you have been following the crypto trends in the past one or two years, you will know that Decentralized Finance has grown exponentially in 2020 where many DeFi platforms were deployed. However, enter the year 2021, the DeFi growth has somehow slowed and seems to have been overtaken by another emerging trend, the NFT industry.

The NFT craze started when Jack Dorsey, Twitter’s founder, and CEO, auctioned his first-ever tweet(on March 21, 2006) as a nonfungible token (NFT) and was bought using ETH for $2.9 million. Since then many NFTs were successfully sold for astronomical dollar values, like the artwork named “Everydays: the First 5000 Days.” by the artist Beeper which was sold for $69 million!

So why do people are crazy about NFTs and willing to spend so much money on them? What is NFT after all? According to Wikipedia, a  non-fungible token (NFT) is a unit of data stored on a distributed digital ledger, aka blockchain, that certifies a digital asset to be unique and therefore not interchangeable. In contrast, a fungible token is a kind of digital asset that is not unique and therefore interchangeable. An NFT represents real-world objects like art, music, in-game items, videos, real estate, and more. They are bought and sold online, frequently with cryptocurrency, and they are usually encoded with blockchain technology.

The following table illustrates the differences between NFT and fungible tokens.

Fungible TokensNon-fungible Tokens
Interchangeable
A fungible token can be exchanged with any other fungible token of the same type. It is like exchanging a dollar bill with another dollar bill and the value is still the same.		Non-Interchangeable
A non-fungible token cannot be exchanged with another non-fungible token of the same type. It is like your passport or ID, they cannot be exchanged.
Uniform
Each fungible token is identical to all other fungible tokens of the same type. For example, your one-dollar bill is the same as John’s one dollar bill.		Unique
Each token is unique and different from all other tokens of the same type. For example, your bank account is not the same as John’s bank account
Divisible
A fungible token can be divided into smaller units and the total value is still the same. For example, you can divide a dollar bill into two 50 cents or five 20 cents and the total value is still the same.		Non-divisible
The non-fungible token cannot be divided into smaller units. The basic unit is one token and one token only. For example, your driving license.
ERC-20 Standard
The Ethereum Standard is used for issuance tokens to be used as cryptocurrencies.		ERC-721 Standard
The Ethereum Standard is used for the issuance of unique, non-fungible tokens. The most well-known case is CryptoKitties, which is a virtual collectibles marketplace where each kitty is unique.

NFT has several properties that help to improve processes and things. First, it can prove and authenticate the ownership of an asset or information, making it suitable for fraud and counterfeit prevention. Therefore, it can be used in the KYC procedure, issuing academic degrees and other educational certificates. Besides that, it can be used in areas that need authentication and proof of ownership and information, such as art, collectibles, badges, voting & elections, loyalty programs, in-game items, copyright, supply chain tracking, medical data, software licenses, warranties, real assets and more. Next, NFT is easily transferable and tradeable by capitalizing the blockchain network, without the need of intermediaries, all you need is a crypto wallet like MetaMask.

The history of NFTs began with the emergence of colored coins on the Bitcoin network(Opensea, n.d.). Rare Pepes, illustrations of the Pepe the Frog character built on the Bitcoin counterparty system, were among the first NFT projects. Some of them actually sold on eBay, and a set of Rare Pepes later sold in a live auction in New York. However the colored coins NFT projects did not gain traction in the mainstream.

Cryptopunk was the first Ethereum based NFT project which created 10,000 unique collectible punks with proof of ownership stored on the Ethereum blockchain. This is the project inspired that the modern CryptoArt movement. It was an inspiration for the Ethereum ERC-721 standard that powers most digital art and collectibles. No two punks are alike, and each one of them can be officially owned by a single person on the Ethereum blockchain. Originally, they could be claimed for free by anybody with an Ethereum wallet, but all 10,000 were quickly claimed. Now they must be purchased from someone on the Ethereum marketplace contract where you can buy, bid on, and offer punks for sale. To learn more, check out the website: https://www.larvalabs.com/cryptopunks

Though Cryptopunk was the first Ethereum based NFT, the first NFT project that made an inroad into the mainstream was the Ethereum based CryptoKitties. Launched in 2017, CryptoKitties featured a primitive on-chain game that allowed users to breed digital cats together to produce new cats of varying rarity. The first-generation cats were auctioned off and new cats could also be sold on a secondary market. At the height of the craze, sales of CryptoKitties nearly touched 5,000 ETH in volume, with Founder Cat #18 selling for 253 ETH ($110,000 at the time of sale). These high prices drew more users into the NFT gold rush.

Today, a couple of NFT platforms have been developed to help users create and mint NFT digital assets, the biggest one being Opensea. It claimed that it is the world’s first and largest NFT marketplace that lets users discover, collect and sell extraordinary NFTs.

References

Real Estate Tokenization

Real estate has always been considered a safe investment compared to the stock market. However, it is also more expensive and illiquid. Though real estate is the largest asset class with a global value of $228 trillion, many retail investors are precluded from investing in this asset class, particularly commercial real estate. Barriers to entry include large upfront investment, very low short-term liquidity, management costs, among others. Therefore, how to make investing in real estate more affordable and accessible to retail investors has become an urgent matter.

In recent decades, a process known as securitization of real assets has reduced the frictions and costs associated with accessing real estate exposure for such retail investors. Among financial instruments that provide indirect investment via securitization of real assets, the most common are public and private real estate investment trust (REIT), real estate investment fund, Real Estate Exchange Traded Funds (ETFs), and real estate crowdfunding. Though investors can already buy and sell real estate investment trusts (REIT), but these often have high minimum investments and represent a large portfolio of companies rather than a single property or new development.

To work around the issues, a new form of securitization known as tokenization of real estate has emerged and is gaining popularity. Tokenization helps asset or fund owners raise capital more efficiently, and gives investors unprecedented access to private real estate investments, transparency, and liquidity.

Tokenization is a way to securitize real assets by dividing them into shares that can be sold to investors. It involves representing ownership of an interest in real estate with virtual tokens that exist on a blockchain which is known as security tokens. These tokens are created using blockchain technology, and once created can be traded on digital exchanges or Alternative Trading Systems (ATS).

An actual tokenization use case happened in Paris recently. The property is known as AnnA Villa, which is valued at € 6.5 million. The Villa became the first-ever property in France that was sold via a blockchain transaction. The transaction took place in three steps. First, the ownership of the building was transferred to a joint-stock company called “SAPEB AnnA.” Next, the ownership of the company was divided into 10 Ethereum-powered tokens which were distributed among the new owners. In the final step, each of these tokens was then further broken down into 100,000 units, meaning each token has a face value of € 6.50. Therefore, you can invest as little € 6.50 in the villa.

Another good use case is Fracproperty in Australia. They have obtained Australian financial services  licence(ASFL) to implement real estate fractionalization. Now at STO stage and currently airdropping their tokens. The tokens will allow you to enjoy fractional rental income and capital gain. You can sign up with this invitation link below to receive 10 FRAC token via the airdrop.

Sign Up to Receive Free FRAC token

Advantages of Tokenization

The main advantage of real estate tokenization is improved liquidity. Liquidity means the ease with which an asset can be bought or sold as the cost of entry will be reduced. Tokenization allows a real asset to be subdivided into smaller units and sold as security tokens to potential investors. For example, a 5000 sqft property that costs $1,000,000 can be divided into 100,000 tokens, and each token sold at $10, a price much more affordable to retail investors.

In addition, tokenization will widen the market reach by creating a global investment pool that can extend the real estate market to buyers and sellers from around the globe. Anyone with sufficient capital and an internet connection can easily participate in buying and selling real estate located anywhere in the world.

Other advantages include the following:

  • Transparency: Blockchain is a public distributed ledger so every transaction of the security tokens can be tracked and accessible to anyone.
  • Security: Blockchain is a distributed ledger that is encrypted using advanced cryptography. Every transaction is encrypted into a hash which is not hackable.
  • Immutable: Once a transaction has been submitted to the blockchain and subsequently confirmed, the data cannot be altered. This means no one can falsify the transactions and hence frauds can be prevented.
  • Improved Operational Efficiency: Smart contracts can automate processes such as compliance checks, investor whitelisting, and post-issuance matters including dividend distribution, thereby reducing cost and settlement time.

Implementation

Implementation of a real estate tokenization project involves the following matters that must be dealt with:

  • White Paper-we need to prepare a whitepaper to describe the tokenonomics, the business model, the technological requirements, legal compliance, and more.
  • Type of Tokenization- We need to decide what interest to tokenize, the real asset itself, the equity of a real estate, a mortgage of the property, or others.
  • Asset Information-Type of asset, whether residential or commercial, the property owner, location of the property, etc.
  • Tokenization Ratio-Whether to tokenize part or entire property
  • Smart Contract-The smart contract must address the questions like the total supply of tokens, the amount of tokens to be distributed to holders, do the holders receive dividends, and so forth. Besides that, you must decide the token standard, usually, we adopt ERC20. In addition, the smart contract must be audited by a certified auditing firm.
  • Securities Regulation-Real estate tokens are securities therefore must be registered with regulatory bodies like SEC.
  • Tax-The earnings from the tokens may be subjected to taxes such as property gain tax etc, must engage tax experts to work out the tax structure and strategy.
  • KYC/AML– Real estate token issuers must comply with AML and KYC laws and regulations. 

Tokenization Process

Basically, real estate tokenization involves the following steps:

  1. Asset Identification—identification of the real estate asset, whether it is commercial or residential, and its location. Besides that, it may involve the acquisition, financing, and appraisal of its value.
  2. Smart Contract Generation—Taking compliance with securities laws into consideration in the creation of the smart contract;
  3. Token Creation—determination of the total supply and type of tokens.
  4. Marketing and Distribution—advertising of the offering, confirmation of investor accreditation and listing of tokens on the exchange through a security token offering (STO); and
  5. Post-Listing Support—ongoing support for investors and distributing dividends or other rights to payment.

Example Real Estate Tokenization: Aspen Coin


A good example of a real estate tokenization project is Aspen Coin. A real estate asset management and advisory firm by the name of Elevated Returns LLC issued a token that represents ownership of Aspen Digital Inc, a Maryland corporation formed with the sole purpose of owning the St. Regis Aspen Resort. Tokenization was handled by the token issuer platform known as Securitize (digital security issuance platform). In addition, Templum, a registered broker-dealer and alternative trading system managed the primary distribution, and Computershare (shareholder services) provided custodianship. Marketing was also supported by Indiegogo, a crowdfunding platform. The project successfully raised $18 million.

The tokenized securities were exempt from registration via Regulation D, and therefore were offered and sold only to accredited investors by means of a private placement memorandum. The minimum investment was set at $10,000. Besides that, dividends are to be distributed on-chain to the token holder wallet using Ether. Secondary trading
is provided by Templum to whitelisted investors, and whitelisting is also provided by Templum.

References

Blockchain-Based Tokenization of Commercial Real Estate

DeFi Products

In this article, I shall discuss the types of DeFi products and services available in the crypto markets. Popular DeFi products include decentralized exchanges, loan and savings markets, tokenized physical assets such as gold, derivatives, forecasting/betting markets, payment, insurance, asset management, and more.

The complete list of DeFi products are as shown in the following Figure.

DeFi loan and savings markets allow you to lend, borrow, or deposit money in a platform. Among the popular loan and savings platforms are Compound, Aave, MakerDAO, Fulcrum, dYdX, and more. If you lend out your digital assets by depositing them in a liquidity pool, you will earn interest over a period.  On the other hand, you can borrow a digital asset by giving another digital asset as a collateral. The collateral is usually ETH but can be other cryptoassets. The debt has an accruing interest which is to be paid off along with the principal.

Decentralized exchanges or DEXs are like stock exchanges but run by smart contracts on the Ethereum blockchain. While both allow you to trade assets, decentralized exchanges only trade cryptoassets and do not require centralized authorities to manage the trading. They run on autopilot 24/7. Therefore, it offers fantastic opportunity to anyone in the world to have access to invest in digital assets, particularly the unbanked and underserved.

In a nutshell, DeFi products allows you to use your digital assets to secure a loan and use that loan to invest in some other digital assets that you expect to gain higher returns. You may also leverage on your collateral to secure more loans to purchase more assets with the expectation that the value of the assets will appreciate, not unlike real estate investment. Besides, you can lend your assets in a lending and borrowing market to earn more attractive interest than banks.

In addition, you may contribute your assets to liquidity pools in the DeFi money market to earn rewards. If your risk appetite is high, you may trade with margin in many different types of Decentralized exchanges. You can even expose yourself to higher risk by leveraging. The list goes on, so do not miss the opportunities!

Blockchain-powered Smart Supply Chain Management -Auto Parts Business case study

The automotive supply chain is a highly complex and broad ecosystem with participants ranging from parts suppliers, manufacturers, sellers to aftermarket suppliers. All parts come with certain life expectancy, specific requirements and maintenance attributes. With thousands of spare parts, hundreds of parameters, and the number of manufactures distributed regionally or globally, the SCM team need to deal with a very large amount of data.

The two most common challenges are the need to keep inventories well-stocked but not overstocked, and the need to deal with the sheer amount of recalls. In addition, the industry is also facing a mirage of issues including tracking of parts, theft, counterfeit products, and data fraud.

Currently, centralized and siloed IT systems have been used to handle the issues but failed in many aspects. On the contrary, decentralized blockchain inherent features could offer perfect solutions to overcome the automotive parts supply chain issues.

  • All participants share a common data
  • Everyone has access to a single source of truth
  • Reducing intermediaries
  • Improved transparency
  • Trust is embedded in the system
  • Tamperproof due to its immutability

Blockchain technology can improve transparency across the supply chain and significantly reduces the cost and complexity of doing business with multiple parties. For automakers and suppliers, blockchain technology offers unique benefits starting with protecting their brands from counterfeit products to enhancing their brand experience by creating customer-centric business models.

Possible benefits of Blockchain usage in SCM

Identification and Tracking of Automotive Spare Parts

Counterfeit Protection -Verifying Authenticity and Origin

Counterfeit products are a significant issue for automotive manufacturers / suppliers and the counterfeit spare parts market is currently estimated at several billion dollars. Counterfeit spare parts are often of low quality and thus more likely to fail. This leads to dissatisfied customers and trust in the brand .

The Blockchain technology offers  significant advantages over existing solutions where spare parts can be uniquely identified and digitally represented. The digital identification of these parts can be shared transparently to multiple parties in the blockchain business network.

Mutual collaboration is facilitated within the parties knowing that sensitive business information remains confidential. Confidentiality is enforced through blockchain cryptographic methods, hence protect integrity of the data  not only from manipulators within the business network but also externally from attackers.

Spare parts service centers  can accurately verify the authenticity of  parts during replacement. The immutability of blockchain provides for a tamper-proof solution and offers a single source of truth.  This will enhance the  trust relationship between customers and  the manufacturer.

Protection of Aftermarket Business

The global aftermarket business was valued at over 800 billion USD in 2018  and expected to grow to over a trillion USD over the next 10 years. Over 50% of this market consists of the sale of vehicle spare parts and business is split across OEM (Original Equipment Manufacturer) and IAM (Independent Aftermarket) Suppliers.

As each product or part is uniquely represented on the blockchain, the technology can be applied to enforce business terms related to the exact production volume and timing. This level of enforcement can also be applied for manufacturers working with more than one supplier as part of their dual sourcing strategy.

Spare Parts Liability Resolution

In case a spare part needs to be replaced due to failure, liability needs to be established and this requires tracing the part back to the manufacturer. If parts are identified and digitally represented on the blockchain, it offers an accurate way to trace the origin. Liability is thus clearly established and is transparent to all parties in the blockchain. Any liability disputes can be resolved  much faster and resources can be focused on customer engagement.

Vehicle Recall Optimization

Many of the recalls involve product defects that are life-threatening and automakers are exposed to a huge liability. With blockchain technology , the car and the individually assembled parts can be uniquely represented on the blockchain. If automakers  can accurately identify  which defective parts were installed in which cars, then the scope of the recall can be precisely executed thus result in massive cost savings.

Optimizing the Supply Chain Process

Inbound Logistics and Smart Manufacturing

Efficient planning of production capacity requires the manufacturing plant to coordinate between multitier suppliers, 3rd party logistics and transportation companies. Tracking and tracing individual parts across the inbound supply chain is complex and error-prone. Accurate, real-time information is not available and information is spread across individual databases.

By using a distributed immutable blockchain ledger across all parties, an accurate view of the status, quantity and location of the individual parts can be established. This  can improve real-time logistics and plant production capacity.

Outbound Logistics Planning

The outbound supply chain in the automotive sector consists of a complex network of manufacturers, distributors, importers, and dealers. Like the inbound supply chain, participants in the outbound supply chain do not have a common data-sharing model.

Having a shared blockchain based system across the different participants will offer transparency and visibility. This will ensure faster transactions by lowering settlement periods.

Business Model Innovation

Car Personalization and Customer Engagement

The driver profile along with car customization preferences can be saved in a personal blockchain wallet. Shared or lease cars will authenticate the driver using the wallet and the car settings are personalized based on the driver profile. Automakers and mobility operators can thus create new business models focusing on individual preferences

Dynamic Pricing Models in Automotive Insurance and Leasing

A driver profile including miles covered, economical usage of vehicle and accident history is securely stored on the blockchain. Users share this data with providers offering insurance and leasing products based on their personal driving profile. The advantage that  blockchain technology brings here is that the driver profile and historic events are immutably stored on the blockchain providing a single source of truth.

Digital Car Wallet

Ownership history, maintenance, and repairs can be transparently, and verifiably stored in a blockchain-based car wallet. Ownership record and fair price assessment of second-hand cars can be quickly established and transferring ownership can be done faster.

As vehicles are uniquely identified on the blockchain, stolen cars can be easily tracked and traced. Lack of trust and business friction arising in the transfer of ownership is hugely reduced. If repairs and parts replacements are verifiably tracked on the blockchain, warranty claims will be transparent for all parties.

M2M  Transactions

Blockchain technology offers a unique way to automate transactions between machines and enable the future of M2M commerce. Cars in the future will be equipped with blockchain-based wallets and transactions with toll booths, park stations, and electric charging outlets will be automated without manual intervention.

The Solution-Hyperledger

Hyperledger is an open source effort created to advance cross-industry blockchain technologies hosted by The Linux Foundation. Hyperledger is a group of open source projects focused around cross-industry distributed ledger technologies. Hosted by The Linux Foundation, collaborators include industry leaders in technology, finance, banking, supply chain management, manufacturing, and IoT.

The Hyperledger project has been a collaboration of players from various industries and organizations in technology, finance, banking, supply chain management, manufacturing, IoT and more. Since its inception in December 2015, it has managed to enlist many prominent members that include IBM, Intel, NEC, Cisco, J.P Morgan, AMN AMRO, ANZ Bank, Wells Fargo, Accenture, SAP and more.

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The Hyperledger Framework

Hyperledger Fabric

Hyperledger Fabric is the first blockchain project developed and hosted by the Linux Foundation. According to the Linux Foundation , it was Intended as a foundation for developing DLT applications or solutions with a modular architecture.

Hyperledger Fabric is an open-source enterprise-grade permissioned distributed ledger technology (DLT) platform, designed for use in developing enterprise applications. It features some key differentiating capabilities over other popular distributed ledger or blockchain platforms.

Hyperledger Fabric is a blockchain framework that runs smart contracts called chaincode, which are written in Go. You can create a private network with Hyperledger Fabric, limiting the peers that can connect to and participate in the network. This private network can be hosted on AWS or other web service provider such as Microsoft Azure , Oracle or IBM.

One special feature of  Hyperledger Fabric is that it allows components, such as consensus and membership services, to be plug-and-play. Besides that, Hyperledger Fabric uses container technology to host smart contracts called chaincode that comprises the application logic of the system.

The AWS Blockchain Template for Hyperledger Fabric creates an EC2 instance with Docker and launches a Hyperledger Fabric network using containers on that instance.

The network includes one order service and three organizations, each with one peer service. The template also launches a Hyperledger Explorer container, which allows you to browse blockchain data. A PostgreSQL server container is launched to support Hyperledger Explorer.

Channels are another unique feature of Hyperledger Fabric. They allow transactions to be private between two actors, while still being verified and committed to the blockchain.

Hyperledger Fabric Architecture

Hyperledger Fabric has a highly modular and configurable architecture. Therefore, enterprises can make use of its versatility to develop innovative business applications.  Besides that, it can be used to optimize the applications. Indeed, Hyperledger Fabric is well suited to develop a broad range of industry use cases including banking, finance, insurance, healthcare, human resources, supply chain and even digital music delivery.

Hyperledger Fabric is a permissioned blockchain network that provides ledger services to application clients and administrators. It allows multiple organizations to collaborate as a consortium to form the network.  The permissions to join the network are determined by a set of policies that are agreed to by the consortium when the network is configured.

Hyperledger Fabric Network

The Hyperledger Fabric network comprises the following components:

  • Ledger
  • Peers
  • Ordering service Chaincode (aka smart contract)
  • Channels
  • Membership service provider

The Hyperledger ecosystem also consists of the client applications that allow users to interact with the network.  Moreover, The Hyperledger Fabric application SDK provides a powerful API for developers to program applications to interact with the blockchain network on behalf of the users. 

Channels are data partitioning mechanisms that allow transaction visibility for stakeholders only. Each channel is an independent chain of transaction blocks containing only transactions for that channel.

The chaincode (Smart Contracts) encapsulates both the asset definitions and the business logic (or transactions) for modifying those assets. Transaction invocations result in changes to the ledger.

The ledger contains the current world state of the network and a chain of transaction invocations. A shared, permissioned ledger is an append-only system of records and serves as a single source of truth.

The network is the collection of data processing peers that form a blockchain network. The network is responsible for maintaining a consistently replicated ledger.

The ordering service is a collection of nodes that orders transactions into a block. The world state reflects the current data about all the assets in the network. This data is stored in a database for efficient access. Currently, supported databases are LevelDB and CouchDB.

The membership service provider (MSP) manages identity and permissioned access for clients and peers.

Channels partition the Fabric network in such a way that only the stakeholders can view the transactions. In this way, organizations can utilize the same network while maintaining separation between multiple blockchains.  The mechanism works by delegating transactions to different ledgers. Members of a channel can communicate and transact privately. Other members of the network cannot see the transactions on that channel.

Components of Hyperledger Network
Channels
SCM Hyperledger Platform on AWS

References